Thursday's Commodities Roundup

Published 9:00 pm, Wednesday, July 31, 2002

NEW YORK (Dow Jones News) _ Crude oil futures ended lower on both sides of the Atlantic on Thursday, dragged down in part by a second session of big declines in gasoline futures.

Nearby September crude futures fell 55 cents to $26.47 a barrel on the New York Mercantile Exchange. Nearby September gasoline futures fell 2.71 cents to 76.22 cents a gallon and September heating oil futures fell 1.42 cent to 67.20 cents a gallon. September natural gas futures fell 11.2 cents to close at $2.842 cents per 1,000 cubic feet.

On London's International Petroleum Exchange, September North Sea Brent crude futures skidded 43 cents to $25.01 a barrel.

The gasoline selloff came amid heavy long liquidation. Until just a couple days ago, many traders were betting that gasoline futures would climb amid robust demand and a weekly decline in inventories. When that didn't happen, these traders found themselves on the wrong side of the market, analysts and brokers said.

On a fundamental basis, there was little reason to bid up gasoline prices Thursday, said Mike Fitzpatrick, an energy analyst at Fimat Futures in New York.

"The driving season is over except for one holiday, Labor Day," Fitzpatrick said. "There is more than enough supply to get us to the start of the heating oil season."

Fitzpatrick added that renewed concerns about the pace of the economic recovery weighed on energy futures, although he questioned whether Thursday's sell-off had anything to do with falling equities prices.

Peter Beutel, an analyst at Cameron Hanover, said the gasoline consumption season is far from over.

"A lot of people say, gee, gasoline demand drops off sharply after Labor Day," Beutel said. "It's a very slow and gradual decline that lasts through the entire fall. It doesn't drop sharply until New Year's Day."

Comments by Rilwanu Lukman, Nigeria's top oil official, were viewed as bearish by some analysts.

Lukman, who also is the president of the Organization of Petroleum Exporting Countries, reiterated that Nigeria plans to lobby OPEC for a larger share of the group's output target, though he added that Nigeria has no intention of leaving the cartel.

Some analysts worry that Nigeria's plea for a higher quota may lead to similar calls by other OPEC members, unraveling the unity within the group.

But Phil Flynn, an analyst Alaron Trading Corp. in Chicago, played down the significance of Lukman's comments.

"How much more can Nigeria produce?" Flynn said, noting that the West African country already produces close to its capacity. "It's one thing to want a higher ceiling, it's another thing to be able to produce at that higher ceiling."

Slaughters are higher than this time last year, adding supplies at a time of unexceptional demand, traders and analysts noted.

August hogs fell 1.63 cents to 50.15 cents a pound, while the most active October future dropped 1.93 cents to 39.77 cents and briefly touched its lower trading limit. At its limit low, October pulled to within .1 cent of the July 24 low, the contract's lowest level since June 28. The July 24 low likely will be tested in Friday's session, traders said.

_Gold futures gained on the Comex division of the New York Mercantile Exchange, reversing earlier losses, after slippage in the dollar and the release of weak U.S. economic data. The December future rose 80 cents to $306 a troy ounce.

_Soybean futures rose at the Chicago Board of Trade, but closed well down from earlier highs after forecasters called for more rain in Iowa. November soybeans gained 5 cents to $5.4150 a bushel, significantly below the day's high of $5.5650.